01c. 1927 ADRestrictionism, however, demands positive sacrifices from the national exchequer when it is carried out by the withdrawal of notes from circulation (say through the issue of interest-bearing bonds or through taxation) and their cancellation.The unpopularity of restrictionism has other causes as well. Attempts to raise the objective exchange-value of money, in the circumstances that have existed, have necessarily been limited either to single States or to a few States and at the best have had only a very small prospect of simultaneous realization throughout the whole world. Now as soon as a single country or a few countries go over to a money with a rising purchasing power, while the other countries retain a money with a falling or stationary exchange-value, or one which although it may be rising in value is not rising to the same extent, then, as has been demonstrated above, the conditions of international trade are modified. In the country whose money is rising in value, exportation becomes more difficult and importation easier.Ludwig von Mises / quote ↗
02c. 1927 ADRestrictionistic ideas have never met with any measure of popular sympathy except after a time of monetary depreciation when it has been necessary to decide what should take the place of the abandoned inflationary policy.Ludwig von Mises / quote ↗
03c. 1927 ADWhen the value of money is increased, then those are enriched who at the time possess credit money or claims to credit money. Their enrichment must be paid for by debtors, among them the State (i.e., the tax-payers). Yet those who are enriched by the increase in the value of money are not the same as those who were injured by the depreciation of money in the course of the inflation; and those who must bear the cost of the policy of raising the value of money are not the same as those who benefited by its depreciation. To carry out a deflationary policy is not to do away with the consequences of inflation. You cannot make good an old breach of the law by committing a new one.Ludwig von Mises / quote ↗
04c. 1927 ADA metallic money, the augmentation or diminution of the quantity of metal available for which is independent of deliberate human intervention, is becoming the modern monetary ideal. The significance of adherence to a metallic-money system lies in the freedom of the value of money from State influence that such a system guarantees.Ludwig von Mises / quote ↗
05c. 1927 ADThe State does not govern the market; in the market in which products are exchanged it may quite possibly be a powerful party, but nevertheless it is only one party of many, nothing more than that. All its attempts to transform the exchange-ratios between economic goods that are determined in the market can only be undertaken with the instruments of the market.Ludwig von Mises / quote ↗
06c. 1927 ADEtatism, as a theory, is the doctrine of the omnipotence of the State, and, as a policy, the attempt to regulate all mundane affairs by authoritative commandment and prohibition. The ideal society of etatism is a particular sort of socialistic community; it is usual in discussions involving this ideal society to speak of State Socialism, or, in some connexions, of Christian Socialism.Ludwig von Mises / quote ↗
07c. 1927 ADEtatism by no means aims at the formal transformation of all ownership of the means of production into State ownership by a complete overthrow of the established legal system. Only the biggest industrial, mining, and transport enterprises are to be nationalized; in agriculture, and in medium- and small-scale industry, private property is nominally to continue. Nevertheless, all enterprises are to become State undertakings in fact. Owners are to be left the title and dignity of ownership, it is true, and to be given a right to the receipt of a 'reasonable' income, 'in accordance with their position'; but, in fact, every business is to be changed into a government office and every livelihood into an official profession.Ludwig von Mises / quote ↗
08c. 1927 ADThere is no room at all for independent enterprise under any variety of State Socialism. Prices are to be regulated authoritatively; authority is to fix what is to be produced, and how, and in what quantities. There is to be no speculation, no 'excessive' profit, no loss. There is to be no innovation unless it be decreed by authority. The official is to direct and supervise everything.Ludwig von Mises / quote ↗
09c. 1927 ADEvery word of etatistic thought is contradicted by the doctrines of sociology and economics; this is why etatists endeavour to prove that these sciences do not exist. In their opinion, social affairs are shaped by the State. To the law, all things are possible; and there is no sphere in which State intervention is not omnipotent.Ludwig von Mises / quote ↗
10c. 1927 ADThat the social life of human beings is subject to definite limitations; that it is governed by a set of laws that are comparable with those of Nature; these are notions that are unknown to the etatist. For the etatist, everything is a question of Macht - power, force, might. And his conception of Macht is crudely materialistic.Ludwig von Mises / quote ↗
11c. 1927 ADHistory likewise shows that sometimes the 'monetary standard of the victors' can prove to be very bad. There have seldom been more brilliant victories than those eventually achieved by the American insurgents under Washington against the English troops. But the American 'continental" dollar did not benefit from them. The more proudly the star-spangled banner rose on high, the lower did the exchange-rate fall, until, at the very moment when the victory of the rebels was secured, the dollar became entirely valueless. The course of events was no different not long afterwards in France. In spite of the victories of the revolutionary army, the metal premium rose.Ludwig von Mises / quote ↗
12c. 1927 ADFor the etatist, money is a creature of the State, and the esteem in which money is held is the economic expression of the respect or prestige enjoyed by the State. The more powerful and the richer the State, the better its money. Thus, during the War, it was asserted that 'the monetary standard of the victors' would ultimately be the best money. Yet victory and defeat on the battlefield can exercise only an indirect influence on the value of money.Ludwig von Mises / quote ↗
13c. 1927 ADNeither has the wealth of a country any bearing on the valuation of its money. Nothing is more erroneous than the widespread habit of regarding the monetary standard as something in the nature of the shares of the State or the community.Such observers fail to recognize that the valuation of the rnonetary unit does not depend upon the wealth of the country, but upon the ratio between the quantity of money and the demand for it, so that even the richest country may have a bad currency and the poorest country a good one.Ludwig von Mises / quote ↗
14c. 1927 ADThe oldest and most popular instrument of etatistic monetary policy is the official fixing of maximum prices. High prices, thinks the etatist, are not a consequence of an increase in the quantity of money, but a consequence of reprehensible activity on the part of 'bulls' and 'profiteers'; it will suffice to suppress their machinations in order to ensure the cessation of the rise of prices. Thus it is made a punishable offence to demand, or even to pay, 'excessive' prices.Ludwig von Mises / quote ↗
15c. 1927 ADLet us merely discuss the question, what consequences would necessarily follow if, ceteris paribus, with an increasing quantity of money, prices were restricted to the old level by official compulsion? An increase in the quantity of money leads to the appearance in the market of new desire to purchase, which had previously not existed; 'new purchasing power', it is usual to say, has been created. If the new would-be purchasers compete with those that are already in the market, then, so long as it is not permissible to raise prices, only part of the total purchasing power can be exercised.Ludwig von Mises / quote ↗
16c. 1927 ADThe attempt to restrain prices within limits has to be given up. A government that sets out to abolish market prices is inevitably driven towards the abolition of private property.Ludwig von Mises / quote ↗
17c. 1927 ADFor once the commodities have been sold that were already on the market when their price was authoritatively fixed at a level below that demanded by the situation of the market, then the emptied store-rooms are not filled again. Charging more than a certain price is prohibited, but producing and selling has not been made compulsory. There are no longer any sellers. The market ceases to function. But this means that economic organization based on division of labour becomes impossible. The level of money-prices cannot be fixed without overthrowing the system of social division of labour.Ludwig von Mises / quote ↗
18c. 1927 ADThe government desires to purchase; it desires to use the market, not to disorganize it. But the officially-fixed price does disorganize the market in which commodities and services are bought and sold for money. Commerce, so far as it is able, seeks relief in other ways. It re-develops a system of direct exchange, in which commodities and services are exchanged without the instrumentality of money. Those who are forced to dispose of commodities and services at the fixed prices do not dispose of them to everybody, but merely to those to whom they wish to do a favour. Would-be purchasers wait in long queues in order to snap up what they can get before it is too late; they race breathlessly from shop to shop, hoping to find one that is not yet sold out.Ludwig von Mises / quote ↗
19c. 1927 ADThey did not suffer shipwreck because the entrepreneurs were not public-spirited, as the socialist-etatistic legend has it. They were bound to fail because the economic organization based upon division of labour and private property in the means of production can function only so long as price-determination in the market is free.Ludwig von Mises / quote ↗
20c. 1927 ADThe agents of etatism have certainly not been lacking in zeal and energy. But, for all this, economic affairs cannot be kept going by magistrates and policemen.Ludwig von Mises / quote ↗
21c. 1927 ADAll that the State need do, and can do, in order to preserve the monetary system undisturbed, is to refrain from such intervention. That is the essence of the monetary theory of the classical economists and their immediate successors, the Currency School. It is possible to refine and amplify this doctrine with the aid of the modern subjective theory; but it is impossible to overthrow it, and impossible to put anything else in its place. Those who are able to forget it only show that they are unable to think as economists.Ludwig von Mises / quote ↗
22c. 1927 ADAccording to the current view, the maintenance of sound monetary conditions is only possible with a 'credit balance of payments'.The confutation of this and related objections is implicit in the Quantity Theory and in Gresham's Law. The Quantity Theory shows that money can never permanently flow abroad from a country in which only metallic money is used (the 'purely metallic currency' of the Currency Principle). The tightness in the domestic market called forth by the efflux of part of the stock of money reduces the prices of commodities, and so restricts importation and encourages exportation, until there is once more enough money at home. The precious metals which perform the function of money are distributed among individuals, and consequently among separate countries, according to the extent and intensity of the demand of each for money. State intervention to assure to the community the necessary quantity of money by regulating its international nlovements is supererogatory.Ludwig von Mises / quote ↗
23c. 1927 ADWhen a country has substituted credit money or fiat money for metallic money, because the legal equating of the over-issued paper and the metallic money sets in motion the mechanism described by Gresham's Law, it is often asserted that the balance of payments determines the rate of exchange. But this also is a quite inadequate explanation. The rate of exchange is determined by the purchasing power possessed by a unit of each kind of money.Ludwig von Mises / quote ↗
24c. 1927 ADOne variety of the balance-of-payments theory attempts to distinguish between the importation of necessaries and the importation of articles that can be dispensed with. Necessaries, it is said, have to be bought whatever their price is, simply because they cannot be done without. Consequently there must be a continual depreciation in the currency of a country that is obliged to import necessaries from abroad and itself is able to export only relatively dispensable articles. To argue thus is to forget that the greater or less necessity or dispensability of individual goods is fully expressed in the intensity and extent of the demand for them in themarket,and thus in the amount of money which is paid for them. However strong the desire of the Austrians for foreign bread, meat, coal, or sugar, may be, they can only get these things if they are able to pay for them.Ludwig von Mises / quote ↗
